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Although a number of experimental and clinical studies have shown that hypoxia typically accompanies acute inflammatory responses, the combinatorial effect of the two insults on basic neural function has not been thoroughly investigated. Previous studies have predominantly suggested that hypoxia reduces network activity; however, several studies suggest the opposite effect. Of note, inflammation is known to increase neural activity. In the current study, we examined the effects of limited oxygen in combination with an inflammatory stimulus, as well as the effects of reoxygenation, on synaptic transmission and excitability. We observed a significant reduction of both synaptic transmission and excitability when hypoxia and inflammation occurred in combination, whereas reoxygenation caused hyperexcitability of neurons. Further, we found that the observed reduction in synaptic transmission was due to compromised presynaptic release efficiency based on an adenosine-receptor–dependent increase in synaptic facilitation. Excitability changes in both directions were attributable to dynamic regulation of the hyperpolarization-activated cation current (Ih) and to changes in the input resistance and the voltage difference between resting membrane potential and action potential threshold. We found that zatebradine, an Ih current inhibitor, reduced the fluctuation in excitability, suggesting that it may have potential as a drug to ameliorate reperfusion brain injury.Hypoxia combined with inflammation reduces synaptic transmission and excitability.Reoxygenation following hypoxia causes hyperexcitability of neurons.Increased Ih during reoxygenation plays a major role in rebounding hyperexcitability.Zatebradine reduced fluctuation in excitability associated with hypoxia/reoxygenation.